My option trades

I was looking through the list of options earnings four days away. Thought I could catch a pre-earnings slope. After going through them all, I selected XLS and GCO.

When I went to check their options, the bid ask spread was way too wide and didn´t seem worthwhile to trade? Even though they are climbing nicely. This amateur is thinking the meat got taken out of the bun, with that wide bid ask price. Am I right?
 
Re: SODA. Not to sound like a broken record, but the 40/50/60 Mar16 fly looks good from 3.00 risk (mid). There is some upside skew, so it makes a bit more sense than the vert.
 
Quote from falconview:

I was looking through the list of options earnings four days away. Thought I could catch a pre-earnings slope. After going through them all, I selected XLS and GCO.

When I went to check their options, the bid ask spread was way too wide and didn´t seem worthwhile to trade? Even though they are climbing nicely. This amateur is thinking the meat got taken out of the bun, with that wide bid ask price. Am I right?
More...

The open interest on those is near zero so the bid-ask spread is unreliable. You never know what will trigger a buy without placing limit orders closer and closer to the ask and you'll have the same problem when you try to sell. I used to trade PBY options a lot but just be aware of how much the stock has to move just to cover the bid-ask spread when the volume is so low.
 
Quote from falconview:

I was looking through the list of options earnings four days away. Thought I could catch a pre-earnings slope. After going through them all, I selected XLS and GCO.

When I went to check their options, the bid ask spread was way too wide and didn´t seem worthwhile to trade? Even though they are climbing nicely. This amateur is thinking the meat got taken out of the bun, with that wide bid ask price. Am I right?
More...

yep, stay away from lightly traded options....doesn't work as expected....you'll be buying them at a premium and selling them at a discount.
 
Quote from atticus:

Re: SODA. Not to sound like a broken record, but the 40/50/60 Mar16 fly looks good from 3.00 risk (mid). There is some upside skew, so it makes a bit more sense than the vert.
More...

That' might work, I'm looking at no more than a pop to $50, and we should get a stop on SODA somewhere before the next leg up anyways....of course all this depends on investor's view of the EURO zone as this one has most of its play in Europe.
 
Quote from ryanpatrick:

That' might work, I'm looking at no more than a pop to $50, and we should get a stop on SODA somewhere before the next leg up anyways....of course all this depends on investor's view of the EURO zone as this one has most of its play in Europe.
More...

The vert is 2 more, and pointless unless you looking for a blowout surprise.
 
Quote from atticus:

The vert is 2 more, and pointless unless you looking for a blowout surprise.
More...

If I did a vertical, it'd have to be worth the price....I wouldn't even touch the 45, I'd have to look at 47.5/55 for about 2.50-2.60 and see what the odds are of SODA holding above $50. I would close the trade out together, and would probably have to leg out to make it worth the troubles. These options are expensive up the roof. At $51 tomorrow morning, the 47.5 jumps to 5.5, and 55 calls jump to 1.50, for about $4 points. In the little time that SODA has traded, it does gap open and then follow the gap by at least 2-3%, the big drop back in July was a gap down by -9.8% and then a follow through of -40% at the bottom of the intraday move. Even in its latest quarter, SODA gapped by 13% and maxed out at 15.8% before closing out at 5%. I'd expect a 10% gap from 46 to 50.60, and then maybe a quick move to at least $51.50-$52.00. Beyond that its anyone guess.

I looked at that drop in July/August 2011, and the report was solid with strong guidance too. This leads me to think that the drop was more of a Eurozone related fear. Since that fear of a Euro breakdown has decreased, if SODA beats with strong guidance, then there's a powerful move ahead. Short interest was at 3M or 25% float back in August and with SODA's average of 1.1M shares, I think we could see +5M with about 1M in pure short covering.
 
For SODA, would you ever consider buying 1 Mar 50 and selling 2 Mar 55's? Then your cost is less than $.50 and it wouldn't starting going negative until SODA headed north of $60.
 
Ryan

Just got back from the beach and looking up and trying to follow along on the merits and demerits of SODA debit Spread for tomorrow report.

I just looked at t 50 / 52.50 spread was -.90 cents. It does seem kind of expensive?

I even thought of gambling with real money instead of a paper trade.

Think I better stick to a paper trade this time though.
 
Quote from falconview:

Ryan

Just got back from the beach and looking up and trying to follow along on the merits and demerits of SODA debit Spread for tomorrow report.

I just looked at t 50 / 52.50 spread was -.90 cents. It does seem kind of expensive?

I even thought of gambling with real money instead of a paper trade.

Think I better stick to a paper trade this time though.
More...


Falcon looked at the implied VOL. that's why it's so expensive. It's over 100 for most/all front month options. you're paying a ton for vol which is why it seems so expensive to you
 
You must log in or register to reply here.
Back
Top